Robert Earl Wade Jr. v. Carolyn Louise Wade ( 2014 )

Opinion issued July 10, 2014.
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-13-00912-CV
———————————
ROBERT EARL WADE JR., Appellant
V.
CAROLYN LOUISE WADE, Appellee
On Appeal from the 359th District Court
Montgomery County, Texas
Trial Court Case No. 11-02-01608 CV
MEMORANDUM OPINION
This appeal concerns the division of property between divorcing spouses. In
three issues, Robert Wade complains that the trial court erred by (1) awarding to
Carolyn Wade a disproportionate share of the marital estate, (2) failing to award to
him his separate property, and (3) reopening evidence in violation of Rule 21 of the
Texas Rules of Civil Procedure.
We affirm.
Background
Carolyn Wade filed for divorce from Robert Wade after 19 years of
marriage. The couple had no minor children; their dispute concerned the division
of property only. When the parties could not agree on a division, the trial court
held a one-day bench trial on the property issue. The majority of the testimony
from Robert and Carolyn focused on the values of their home and family-run
business.
Robert testified that the home had a value of $120,000 and offered as
evidence an appraisal he obtained that was consistent with that valuation. Carolyn
suggested that the house was worth between $150,000 and $180,000 but
acknowledged she had a separate appraisal done on the property that resulted in an
appraisal of $136,000. Both parties agreed that Carolyn was owed a credit of
$30,000 for the down payment she paid from her separate property in 1996. They
further agreed that the party who was not given the right to possess the property
should receive one-half of the equity in the home when the marital assets were
divided by the trial court, but they could not agree on the dollar amount that would
result from that division. Robert indicated at one point that, if he were given
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possession, Carolyn should receive $72,000, but he later testified that she should
receive only $36,500.
Carolyn requested that she be granted possession of the home but also
indicated that she was willing to accept a money judgment equal to her one-half
interest instead. Robert, on the other hand, was adamant that he wanted possession
of the home.
Regarding their family-run business, Robert and Carolyn testified that they
started the company in 1992, which they described as a small construction
company that also did septic service excavation. Robert took the position that the
company had no value outside of the value of the equipment they owned, which
was listed separately on his inventory. Carolyn disputed that the company was
worthless. According to Carolyn, the couple’s business had a gross income of
$220,000 in the year preceding the divorce—and had even higher revenues in
previous years. Robert requested that he be given full ownership of the business in
the division of community assets.
Both Robert and Carolyn also testified about a storage shed that had been on
their residential property. Carolyn testified that, when she moved out, she took the
portable shed with her to store her things. She said that it had only been used to
store the couple’s lawn mower and Christmas decorations before she moved it.
Robert testified that the shed was a gift to him from his sister, making it his
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separate property. Robert asked that he be awarded the building as his separate
property. He placed a value on the shed of $5,400 but admitted that he and Carolyn
had used community funds to make improvements to the building after it was
given to him. Neither party testified to the amount of community funds invested in
the structure.
At the conclusion of the one-day trial in May 2012, the trial court ordered
that the couple be divorced but stated that it would need additional time to prepare
an order dividing the property. Over the next several months, the trial court issued
two orders. The first order granted Robert possession of the family home—which
the court valued at $120,600—and provided that Carolyn would receive a
reimbursement for her $30,000 separate property investment in the home and a lien
in the amount of her one-half interest in the remaining value of the home. The
second order divided some personal property between Robert and Carolyn. It
granted to Carolyn a truck, a recreational vehicle, and “various furniture and
fixtures” in her possession, while granting to Robert two trucks, a tractor, two
trailers, and “various furniture and fixtures located at marital residence.” The
parties continued to disagree regarding the division of other personal property not
addressed in the trial court’s two orders. Accordingly, no final decree was entered.
After almost one year had passed since the one-day trial was held, and still
without a final decree dividing the couple’s property, Carolyn submitted a
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proposed property division and requested that judgment be entered consistent with
that proposal. Robert responded with a “Court Ordered Response and Objection to
Petitioner’s Property Division Outline” in which he asserted that he had already
filed a proposed final decree to which Carolyn had not objected or otherwise
responded.1 Robert objected to Carolyn’s suggested division, arguing that her
division was “based upon values and property that were not put forth in evidence at
trial.” The following month, in June 2013, Carolyn moved for entry of a final
decree and requested a hearing and entry of judgment consistent with her proposed
property division.
A hearing was held on Carolyn’s motion in July 2013. At that hearing, the
trial court specifically stated that it was not going to re-open the evidence, yet the
court swore in Carolyn and Robert and asked them questions about the location
and value of various personal property items still in dispute. Some of these items—
like the tools used in connection with the couple’s septic business—had been
discussed at the earlier, one-day trial, while others—like lampshades that remained
in the home awarded to Robert—had not. Both parties indicated that they were
requesting an off-set for the difference in value of these personal property items.
Nonetheless, Robert objected to the off-set procedure, contending that the values
discussed at the hearing were inconsistent with the trial testimony.
1
Robert’s proposed decree is not in the appellate record.
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The trial court issued a final decree the same day as the hearing but did not
make separate findings of fact or conclusions of law. Robert refused to sign the
decree. It is the division of property contained in that decree that Robert appeals.
Evidence to Support the Trial Court’s Property Division
In his first issue, Robert complains that the evidence is insufficient to
support the trial court’s division of the marital estate.
A. Standard of review
When dividing property between divorcing spouses, the trial court is
required to “order a division of the estate of the parties in a manner that the court
deems just and right, having due regard for the rights of each party and any
children of the marriage.” TEX. FAM. CODE ANN. § 7.001 (West 2008); Murff v.
Murff, 615 S.W.2d 696, 698 (Tex. 1981); Leax v. Leax, 305 S.W.3d 22, 33–34
(Tex. App.—Houston [1st Dist.] 2009, no pet.). The trial court has broad discretion
in making a “just and right” division of the community estate, and its discretion
will not be disturbed on appeal absent a clear abuse of discretion. Leax, 305
S.W.3d at 34; see also Chafino v. Chafino, 228 S.W.3d 467, 472 (Tex. App.—El
Paso 2007, no pet.) (“It is the reviewing court’s duty to presume that the trial court
properly exercised its discretion in dividing the estate.”). A trial court abuses its
discretion in making the property division if it acts arbitrarily or unreasonably,
without reference to any guiding rules and principles. Evans v. Evans, 14 S.W.3d
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343, 346 (Tex. App.—Houston [14th Dist.] 2000, no pet.) (citing Worford v.
Stamper, 801 S.W.2d 108, 109 (Tex. 1990)).
We must determine whether (1) the trial court had sufficient information
upon which to exercise its discretion and (2) the trial court abused its discretion by
dividing the property in a manner that is manifestly unjust or unfair. Id. A trial
court does not abuse its discretion when some evidence of a probative and
substantive character exists to support the division. Newberry v. Bohn-Newberry,
146 S.W.3d 233, 237 (Tex. App.—Houston [14th Dist.] 2004, no pet.). When, as
here, no separate findings of fact or conclusions of law are requested by the
appealing party or made by the trial court, we must draw every reasonable
inference supported by the record in favor of the trial court’s ruling. Worford, 801
S.W.2d at 109.
If the evidence demonstrates a reasonable basis for doing so, a trial court
may order an unequal division of the community property. Murff, 615 S.W.2d at
698–99 & n.1. In Murff, the Court identified factors to consider when dividing
marital property, including the nature of the marital property; the relative earning
capacity and business experience of the spouses; their relative financial condition
and obligations; their education; the size of separate estates; the age, health, and
physical conditions of the parties; fault in breaking up the marriage; the benefit the
innocent spouse would have received had the marriage continued; and the probable
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need for future support. Id. at 699–700. We presume that the trial court exercised
its discretion properly in applying these factors. Id. (“The trial court in a divorce
case has the opportunity to observe the parties on the witness stand, determine their
credibility, evaluate their needs and potentials, both social and economic. . . . [The
trial court’s] discretion should only be disturbed in the case of clear abuse.”).
B. The trial court did not err in dividing the community estate
Robert contends that the marital property was unevenly divided and that
there was insufficient evidence to support that unequal division, given that only he
provided evidence of the value of the marital assets. Robert specifically complains
that the trial court awarded Carolyn “one-half of the value of the assets, but not
one-half of the debt.” The debt that Robert complains of is a “business loan” in the
amount of $8,750 incurred during the pendency of the divorce.
Because Robert did not request findings of fact from the trial court, he
cannot establish whether the trial court intended its division to be near-equal or if,
instead, it determined that the evidence supported a disproportionate division in
favor of Carolyn. Tate v. Tate, 55 S.W.3d 1, 10 (Tex. App.—El Paso, 2000, no
pet.) (noting that without findings of fact, it is uncertain whether division was
intended to be equal or disproportionate). Nor can he establish what factors the
trial court might have found to warrant an uneven distribution, if one was intended.
See id. In this context, we must presume that the trial court properly exercised its
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discretion in applying the Murff factors and will uphold an unequal distribution if
the circumstances demonstrate a reasonable basis for such an award. Murff, 615
S.W.2d at 699–700; Leax, 305 S.W.3d at 34. We turn now to the division of assets
ordered by the trial court.
At Robert’s request, he was granted possession of the family home. Carolyn
was awarded a credit of $30,000, which was the amount of Carolyn’s separate
property the parties agreed had been used as a down payment on the home. 2 The
court valued the home at $120,600, based on the appraisal by Robert’s expert. The
court divided the equity in the home equally between Robert and Carolyn based on
that value.
Robert had valued the family business at zero, which Carolyn disputed. She
testified that the business had been profitable in the past and suggested that she
should share in the financial benefit of that success. Robert argued that the value in
the business was limited to the value of the tools and equipment he used to
excavate septic systems and perform other construction work. As part of the
division of the marital estate, the trial court granted to Robert the business, nearly
all of the equipment, trailers, and tools used in connection with the business, as
2
A down-payment of $30,000 has been made on the home with Carolyn’s separate
property in 1996. There is no indication that the trial court adjusted Carolyn’s
reimbursement to take into account the time value of money in making a “just and
right” division. TEX. FAM. CODE ANN. § 7.01 (West 2008).
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well as the $8,750 business debt; Carolyn was given a credit of $11,636 based on
the value of the property granted to Robert.
Thus, the two main items that were in dispute during the trial were divided
nearly equal: the parties split the equity in their home evenly and the court awarded
Carolyn an $11,636 credit based on the difference in value of the remaining
property divided between them. Even using the values Robert assigned to the
family business and the other property in his submitted inventory and appraisal, we
conclude that the $11,636 credit did not result in a clear abuse of discretion. 3 See
Murff, 615 S.W.2d at 700 (“Mathematical precision in dividing property in a
divorce is usually not possible. Wide latitude and discretion rests in these trial
courts and that discretion should only be disturbed in the case of clear abuse.”). To
the extent the property division could be considered an unequal division, we
conclude that the record supports such an award. See Murff, 615 S.W.2d at 699
(holding that “consideration of a disparity in earning capacities or of incomes is
3
Robert was granted a tractor, boat, two trucks, two trailers, tools, and equipment
that he valued at $19,050 total, based on his contention that he owed as much on
his truck as it was worth. Carolyn received a much older truck, a “4-wheeler,” and
a trailer and storage building which, according to Robert’s calculations, equaled
$14,600 total. Using Robert’s suggested valuations, the difference between what
was granted to him and to Carolyn was $4,450—less than half of the $11,636
Carolyn was provided as an off-set. Using Carolyn’s suggested valuations,
however, Robert was awarded assets worth more than $27,000 more than Carolyn,
causing the $11,636 off-set to be less than half the amount it should have been.
Each party was also given possession of additional personal property items
specifically listed in the decree but to which no values had been assigned as well
as all remaining personal property items already in each party’s possession.
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proper” and that such disparity in income or business opportunities can support an
uneven division).
One of the factors the trial court may consider in granting an unequal
division of property is the parties’ comparative incomes and business
opportunities. See Murff, 615 S.W.2d at 699–700. Carolyn’s employment at the
time that the property was divided provided her an annual salary of $24,000.
Robert’s income came from the couple’s construction company, which had a
history of earning a gross income of $200,000 per year or more. Carolyn was
denied any ownership interest in that family business, which she and Robert had
grown during their marriage. Carolyn also was denied the right to occupy the
family home; it was awarded to Robert. Considering that Robert was awarded the
business and possession of the home and taking into account the disparity in
income and business opportunity between Robert and Carolyn, we cannot conclude
that the award of slightly more community assets to Carolyn was unfair or
unreasonable based on this record. Because we do not conclude that the
community estate was divided in a manner that was manifestly unfair to Robert,
we overrule his first issue.
Separate Property Claim
In his second issue, Robert contends that the trial court erred by failing to
award to him a portable shed he alleges was his separate property.
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A. Separate property defined and standard of review
A spouse’s separate property is defined by statute as the property “owned or
claimed by the spouse before marriage” or “acquired by the spouse during
marriage by gift, devise, or descent,” as well as any “recovery for personal
injuries” sustained during the marriage, with limitations. TEX. FAM. CODE ANN.
§ 3.001 (West 2008). Community property is all property that was acquired by
either spouse during the marriage that is not separate property. TEX. FAM. CODE
ANN. § 3.002 (West 2008).
There is a statutory presumption that all property possessed by either spouse
during or at dissolution of the marriage is community property. TEX. FAM. CODE
ANN. § 3.003(a) (West 2008). To overcome the presumption that property is
community property, the spouse seeking to have the property categorized as
separate property must establish that fact through “clear and convincing evidence.”
TEX. FAM. CODE ANN. § 3.003(b) (West 2008). A party can establish the separate
character of property by clearly identifying the property and tracing it back to the
time and means by which the spouse originally obtained possession of the
property. Estate of Hanau v. Hanau, 730 S.W.2d 663, 667 (Tex. 1987). If the
evidence shows that property sought to be labeled as separate property has been
commingled with community property “so as to defy segregation and
identification,” the burden is not met and the statutory presumption of community
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property will prevail. Id. Thus, improvements made to separate property using
community funds can cause what was initially separate property to lose its
character and become community property. Id. (citing Lantham v. Allison, 560
S.W.2d 481, 484–85 (Tex. App.—Fort Worth 1978, writ ref’d n.r.e.)).
Mischaracterizing separate property as community property is an error that
may require reversal. See Pearson v. Fillingim, 332 S.W.3d 361, 363–64 (Tex.
2011) (“Certainly, a court cannot divest an owner of separate property.”);
Eggemeyer v. Eggemeyer, 554 S.W.2d 137, 139–41 (Tex. 1977). However,
reversal is not always required. For example, a trial court does not err in
characterizing separate property as community property if the party who had the
burden to establish the separate nature fails to present adequate evidence to meet
that burden. See Pearson, 332 S.W.3d at 354 (stating that such mischaracterization
would not be error because “a court has jurisdiction to characterize community
property—even if it does so incorrectly.” (quoting Reiss v. Reiss, 118 S.W.3d 439,
443 (Tex. 2003))).
Even if the spouse who is arguing that property is separate property does
satisfy the evidentiary burden, a mischaracterization of separate property as
community property will not require reversal if the mischaracterization had only a
de minimus effect on the overall division of the estate. See Robles v. Robles, 965
S.W.2d 605, 621–22 (Tex. App.—Houston [1st Dist.] 1998, pet. denied). It is only
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when the court mistakenly characterizes property that is of such magnitude that it
materially affects the just and right division of the community estate that reversible
error is demonstrated. See id.; Stavinoha v. Stavinoha, 126 S.W.3d 604, 608 (Tex.
App.—Houston [14th Dist.] 2004, no pet.) (holding that reversal is unwarranted
unless uneven division is “manifestly unjust and unfair”); see also Humphrey v.
Humphrey, 593 S.W.2d 824, 828 (Tex. App.—Houston [14th Dist.] 1980, writ
dism’d) (concluding that, when property division was equitable, mistake by trial
court characterizing community property as separate property “was harmless and
does not require reversal”).
When, as here, the appellant did not request findings of fact and conclusions
of law, we must affirm the judgment if it can be supported on any theory presented
by the record, viewing the evidence in the light most favorable to the appellee—in
this case, Carolyn. Goodyear Tire & Rubber Co. v. Jefferson Constr. Co., 565
S.W.2d 916, 918–19 (Tex. 1978); Patt v. Patt, 689 S.W.2d 505, 507 (Tex. App.—
Houston [1st Dist.] 1985, no writ).
We consider, then, whether the trial court mischaracterized the shed as
community property and, if so, whether such error requires a reversal of the
property division.
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B. Mischaracterization, if it occurred, had only a de minimus effect
Robert’s inventory and appraisal, which he submitted pre-trial, assigned a
value to the portable shed of $5,600. According to the trial testimony, this was a
12 foot by 16 foot storage building that the couple used to store a lawn mower and
some Christmas decorations. Carolyn testified that she took the portable building
with her when she moved out so she could store her belongings. Robert countered
that the shed had been a gift to him from his sister, which made it his separate
property. Robert also testified that he and Carolyn used community funds to make
improvements on the structure, though he did not indicate the amount of
community funds they invested in the shed.
Robert’s post-trial filings, in which he disputed Carolyn’s proposed property
division, never mentioned the shed specifically. Neither did the divorce decree
specifically mention the shed or explicitly award it to one of the parties. Instead, it
appears that the shed was awarded to Carolyn through a general provision in the
decree granting to each party all personal property, fixtures, furnishings, and
equipment currently in their possession.
Even assuming that the trial court ruled that the shed was community
property and erred in granting it to Carolyn, we conclude that such error had, at
most, a de minimus impact on the property division given the relatively small
value of the structure and the fact that community assets were used to improve the
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structure to its stated value. See Vickery v. Vickery, 999 S.W.2d 342, 371–72 (Tex.
1999) (concluding that mischaracterization of property did not result in unjust
division, given community reimbursement claim that would have existed had
property been correctly characterized as separate property); Tate v. Tate, 55
S.W.3d 1, 11–12 (Tex. App.—El Paso 2000, no pet.) (“It is only when the court
mistakenly characterizes property that is of such magnitude that it materially
affects the just and right division of the community estate that reversible error is
demonstrated.”).
Accordingly, given the de minimus effect mischaracterization of this shed
would have had on the property division, we conclude that any error by the trial
court in its award of the shed to Carolyn did not result in a manifestly unfair or
unjust division or in an abuse of the trial court’s discretion.
We, therefore, overrule Robert’s second issue.
Re-Opening Evidence
In his third issue, Robert complains that the “trial court erred and abused its
discretion in its division of the parties’ marital assets by reopening the evidence at
a hearing without notice and . . . in violation of Rule 21 of the Rules of Civil
Procedure.”
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A. Standard of review
In a bench trial, a trial court may permit additional evidence to be offered “at
any time” when it “clearly appears to be necessary to the due administration of
justice . . . .” TEX. R. CIV. P. 270; Moore v. Jet Stream Invs., Ltd., 315 S.W.3d 195,
201 (Tex. App.—Texarkana 2010, pet. denied). The standard of review applicable
to evidentiary rulings is abuse of discretion. Harris Cnty. v. Inter Nos, Ltd., 199
S.W.3d 363, 367 (Tex. App.—Houston [1st Dist.] 2006, no pet.). Similarly, a
ruling to allow or disallow additional evidence after the parties have closed is
reviewed under the abuse-of-discretion standard. Naguib v. Naguib, 137 S.W.3d
367, 372 (Tex. App.—Dallas 2004, pet. denied); Moore, 315 S.W.3d at 201. The
test for abuse of discretion is whether the trial court acted without reference to
guiding rules and principles. Cire v. Cummings, 134 S.W.3d 835, 838–39 (Tex.
2004).
B. Notice argument not supported by law
First, we note what Robert’s contentions on appeal do not involve. Robert
does not complain that he was provided inadequate notice that there would be a
hearing on July 1. Notice was given that Carolyn would present a motion for entry
of judgment that day. Further, Robert does not contend that the trial court was
prohibited from receiving new evidence. As Robert explains, “The complaint . . . is
17
not that the evidence was reopened, but that [Carolyn] did not give notice and the
opportunity for [Robert] to prepare for [a] hearing” involving new evidence.
Second, we point out that neither party examined or cross-examined Robert
or Carolyn at the July 1 hearing. Instead, the trial court, as the trier-of-fact in this
non-jury divorce case, asked questions of the parties regarding the location and
value of the personal property items in dispute. To the extent Robert was
unprepared for this procedure, he failed to request a continuance of the hearing to
gather and offer additional evidence. Further, Robert did not contend that the items
discussed had not been adequately disclosed in discovery.
Third, we note that Robert has not cited any authority to support his
contention that the three-days’-notice requirement found in Rule 21 applies to the
re-opening of evidence in a bench trial. See TEX. R. APP. P. 38.1(i) (requiring
appellate brief to include appropriate citations to authorities and to the record);
TEX. R. CIV. P. 21. We find no authority to support those contentions either.
Instead, the wording of Rule 270 and the related case law support a contrary view.
Rule 270 provides that a trial court may admit additional evidence “at any
time” when necessary to the due administration of justice. TEX. R. CIV. P. 270. In
deciding whether to exercise its discretion and reopen the evidence, the court may
consider a number of factors, including (1) the diligence of a party in presenting its
evidence, (2) whether reopening the record will cause undue delay, (3) whether
18
granting the motion to reopen the evidence “will cause an injustice,” and
(4) whether the evidence to be introduced is decisive. See In re A.F., 895 S.W.2d
481, 484 (Tex. App.—Austin 1995, no writ). The trial court should exercise its
discretion liberally “in the interest of permitting both sides to fully develop the
case in the interest of justice.” In re Hawk, 5 S.W.3d 874, 877 (Tex. App.—
Houston [14th Dist.] 1999, no pet.); Word of Faith World Outreach Ctr. Church,
Inc. v. Oechsner, 669 S.W.2d 364, 366–67 (Tex. App.—Dallas 1984, no writ).
Our review of the cases involving the appeal of a trial court’s ruling on a
Rule 270 motion indicates that such motions are often urged in the course of the
trial. See, e.g., In re A.F., 895 S.W.2d at 484 (holding that trial court did not abuse
discretion by granting State’s motion to re-open evidence after State rested but
before case was given to jury). Such a scenario hardly allows for three days’ notice
of the request to re-open evidence. Instead, the rule permitting a trial court to re-
open evidence “at any time” suggests that it is a mechanism afforded to the trial
court to provide an immediate remedy to parties who perceive a need to introduce
an additional evidentiary item after the evidence has closed. TEX. R. CIV. P. 270.
This is inconsistent with Robert’s interpretation that would impose a requirement
of three days’ notice of a request to re-open the evidence.
Finally, because we already have concluded that the division of property was
not manifestly unfair or unjust to Robert, we also conclude that Robert is unable to
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demonstrate that he was harmed by the procedure used by the trial court at the
July 1 hearing to finalize valuations for disputed property. See Sias-Chinn v.
Chinn, No. 03-11-00128-CV, 2012 WL 677496, at *3 (Tex. App.—Austin Feb. 29,
2012, no pet.) (mem. op.) (holding that wife could not demonstrate harm because
division was not manifestly unjust); see also Bullock v. Bullock, No. 01-86-00051-
CV, 1987 WL 17053, at *3 (Tex. App.—Houston [1st Dist.] Sept. 17, 1987) (mem.
op., not designated for publication) (holding that incorrect valuations did not
require reversal absent demonstration that those incorrect values led to manifestly
unjust division of community property).
Because any slight adjustments in value that the trial court might have
considered after questioning Robert and Carolyn at the July 1 hearing did not result
in a manifestly unjust division of property, Robert cannot establish harm based on
his contention that he had inadequate notice to prepare for the hearing. Even if the
trial court erred by questioning Robert and Carolyn about their property at the
July 1 hearing, without harm, Robert cannot obtain a reversal of the division of
property. Accordingly, we overrule Robert’s third issue.
Conclusion
Having overruled all three of Robert’s issues, we affirm the judgment of the
trial court.
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Harvey Brown
Justice
Panel consists of Chief Justice Radack and Justices Higley and Brown.
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